European shares fell and investors sought the safety of low-risk German debt and gold on Wednesday as the anxious wait for fresh talks aimed at averting a Greek default left everyone vulnerable to sudden moves.

European shares lurched lower, and US stock futures extended losses, after a Greek government official said the country’s creditors had rejected some of its proposals.

According to a statement from the official, Greek Prime Minister Alexis Tsipras, before leaving for talks in Brussels, that creditors had rejected some of Greece’s proposals.

Losses were pared after a European Union official said talks with Greece were still going on and that Tsipras would meet the creditors as planned.

The episode nonetheless rattled markets.

“Most people were assuming ... they’d agree on something,’’ said Alan McQuaid, chief economist at Merrion Stockbrokers. "I was quite relaxed thinking a deal might get done and now you get this bombshell... Is that the end of it? I don't know."

Tsipras was due to meet the heads of the European Central Bank, the International Monetary Fund and the European Commission in Brussels before a meeting later in the day of euro zone finance ministers.

The pan-European FTSEurofirst 300 index fell 0.3 per cent after the statement, having traded about flat for most the day. US stock index futures extended losses.

Greek shares fell further to trade 3.6 per cent lower.

Yields on German 10-year government bonds, the benchmark for euro zone borrowing costs, fell as low as 0.81 per cent after the statement, before rebounding slightly to 0.84 per cent, down 3.4 basis points on the day.

Yields on Italian and Spanish 10-year bonds, seen vulnerable to contagion from the Greece crisis, both ticked up to 2.14 per cent.

“We have a very important day ahead and it may be a volatile day,’’ said KBC strategist Piet Lammens. "It's clear that it's not yet a done deal."

The euro fell against the dollar, which held on to most of Tuesday’s gains on prospects of higher interest rates.

Earlier, Asian shares eked out modest gains. MSCI’s index of Asia-Pacific shares outside Japan ticked up 0.2 per cent. A close around there would bring gains over the past six sessions to around 3 per cent.

Japan’s Nikkei closed up 0.3 per cent to hit its highest level since 1996, lifted by the prospect of a deal on Greece and signs of a pick-up in Japanese economic growth.

In foreign exchange, the dollar fell 0.2 per cent against a basket of currencies, but held on to most of Tuesday's 1.2 per cent gains.

The euro rose 0.2 per cent to $1.1190, having risen as high as $1.1235, and the yen was all but flat at 123.90 per dollar.

“We had a pretty big move up in the dollar, so it’s natural that there is a pause especially with the U.S. calendar a bit empty and little in store to push Treasury yields higher today,’’ said Niels Christensen, FX strategist at Nordea.

Robust US economic data has firmed up expectations that the Federal Reserve will raise interest rates later this year for the first time since 2006.

Fed Governor Jerome Powell had said on Tuesday he was prepared to raise interest rates twice this year as long as the economy performed as expected.

Oil prices nudged higher on prospects of stronger U.S. demand after the American Petroleum Institute forecast on Tuesday a bigger-than-expected fall in U.S. oil stocks last week. Concern about potential impediments to a nuclear deal between Iran and six world powers also supported prices.

Brent crude was last 11 cents a barrel higher at $64.56.

Gold lifted off a one-week low after the Greek statement. It last traded at $1,177.94 an ounce, having fallen as low as $1,173.80.

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